The Science Based Targets initiative (SBTi), a prominent organization in corporate environmental sustainability, has unveiled a series of research publications. These reports are expected to inform the upcoming revision of their corporate climate target-setting standard. The findings suggest that the new standard will probably exclude the use of carbon credits for offsetting value chain emissions, marking a shift in the organization’s approach.
The recent findings contrast previous indications by the SBTi board that carbon credits could be part of the strategy to tackle Scope 3 value chain emissions. This suggestion stirred considerable debate within and outside the organization. Notably, Scope 3 emissions, which include indirect emissions from a company’s supply chain and product use, represent a substantial portion of most companies’ carbon footprints.
Shift in Carbon Credits Usage
Founded in 2015, the SBTi aims to standardize science-based environmental target setting. Its core functions include promoting best practices in emissions reductions, providing technical assistance, and independently validating corporate emissions reduction targets. The initiative launched the Corporate Net-Zero Standard in 2021, setting criteria for companies to decarbonize up to 95% by 2050.
Earlier this year, the SBTi announced a review of its Corporate Net Zero Standard to include additional guidance on Scope 3 emissions. This announcement followed a call for evidence on the usage of Environmental Attribute Certificates (EACs), such as carbon credits. The SBTi board initially proposed using EACs to manage Scope 3 emissions, a move that faced internal backlash, leading to a clarification that any use of EACs would be evidence-based.
Expert Opinions and Future Steps
Alberto Carrillo Pineda, Chief Technical Officer at SBTi, emphasized the importance of direct decarbonization and noted the critical role of the newly released reports in refining the approach to Scope 3 emissions. Meanwhile, Sue Jenny Ehr, Interim CEO, pointed out the necessity of setting robust targets as a preliminary step towards decarbonization.
In a synthesis report, SBTi highlighted studies showing that various types of carbon credits often fail to deliver their intended mitigation outcomes. The report stressed the potential risks of corporate reliance on carbon credits, which could hinder the net-zero transformation and reduce climate finance effectiveness. However, the report also acknowledged the limitations of existing studies and called for more evidence to draw definitive conclusions.
The SBTi plans to release a draft of the revised Corporate Net-Zero Standard for public consultation by late 2024. This step aims to engage businesses and stakeholders in shaping effective climate strategies. The upcoming public consultation period will play a vital role in refining the standards to ensure they drive substantial emissions reductions.
